I Previously Filed For Bankruptcy, Can I File Again? Yes, you can!
Life can be messy so there are times when it could make sense to file bankruptcy more than once. Perhaps you fell back on hard times after your first bankruptcy was complete: unexpected medical emergencies, job loss or a divorce. Although not recommended, technically you can file for bankruptcy as many times as you feel appropriate. However, you are only able to obtain a discharge of your debts in the new case if there was an adequate amount of time between each bankruptcy filing.
It’s important to note the differences between Chapter 7 and Chapter 13 bankruptcy before we discuss how often you can file for this type of protection.
Chapter 7 vs. Chapter 13 bankruptcy: What’s the difference?
Chapter 7 bankruptcy is a process that helps consumers liquidate their assets and pay off delinquent debts. While Chapter 7 bankruptcy allows consumers to keep some of their personal assets up to certain limits, consumers typically choose this type of bankruptcy when they don’t have many assets to protect. Chapter 7 bankruptcy can take three to six months to complete, but it does allow consumers to discharge delinquent debts and get a fresh start.
With Chapter 13 bankruptcy, consumer debts are restructured instead of discharged. Consumers typically choose this type of bankruptcy because they have assets to protect, such as significant equity in their home. Once the Chapter 13 bankruptcy process begins, a court-approved debt repayment plan is set up and followed over three to five years. At the end of Chapter 13 bankruptcy, consumers will have been able to keep all their property and pay off unsecured debts included in their bankruptcy.
Are there limits to how often you can file bankruptcy?
While nobody dreams of filing bankruptcy someday, there are situations where bankruptcy is not only the best solution but the only way delinquent debts can be resolved. If someone finds they have an expensive medical condition and racks up hundreds of thousands of dollars in medical debt, for example, they may never pay those debts off through traditional means.
The designated “waiting limits” between each bankruptcy filing depend on the type of bankruptcy you last filed for as well as whether your previous case was successful (discharged) or dismissed.
If the previous bankruptcy case was successful, then traditional waiting limits (which we’ll cover more below) apply. However, the law has prohibitions to prevent serial filers — or consumers who seek to file bankruptcy over and over — from taking advantage. Consumers who file for Chapter 7 or Chapter 13 bankruptcy within one year of having a bankruptcy case dismissed must prove in court why their new bankruptcy case will be successful when their last case was not.
If they successfully prove their case, then an automatic stay — which prevents civil lawsuits and collection actions from proceeding against you — may be granted. If a new bankruptcy case is filed within a year of two previous bankruptcy cases being dismissed, on the other hand, an automatic stay will not be granted right away. Consumers may, however, ask the bankruptcy judge to impose the automatic stay for a specific length of time if they believe their situation warrants it.
If your previous bankruptcy was a Chapter 7
If you previously filed Chapter 7 bankruptcy successfully, this means you may have had some of your assets liquidated to pay off delinquent debts. You also had debts included in your bankruptcy discharged. You must wait at least eight years before you can file for Chapter 7 bankruptcy again. Keep in mind, however, that the eight years begins from the original date of filing and not the original date of the first Chapter 7 bankruptcy discharge.
You may, however, file a Chapter 13 bankruptcy and receive a discharge after a successful Chapter 7 case after waiting only four years. Occasionally you can file a motion for Chapter 13 bankruptcy sooner than four years after a Chapter 7 bankruptcy and that this scenario is a lot more common than people think. It’s so common, in fact, that attorneys have come up with a slang term to describe a Chapter 7 bankruptcy followed promptly by a Chapter 13 bankruptcy. This slang term, which is not really a type of bankruptcy at all, is called a “Chapter 20.” Some courts allow this type of case to proceed and others do not.
If your previous bankruptcy was a Chapter 13
If you successfully filed for Chapter 13 bankruptcy in the past, this means you had your debts restructured so you could pay them off over three to five years. This also means that you were able to keep your personal property throughout the bankruptcy process.
If you are in a position where you need to file bankruptcy again after a Chapter 13 bankruptcy, you will find that the waiting limits aren’t quite as severe.
You can file for Chapter 7 bankruptcy any time after a Chapter 13 bankruptcy provided your previous bankruptcy case resulted in you paying off all debts included in the case. The court may, however, allow another discharge if the old case paid at least 70% of your creditors and the new Chapter 13 plan was proposed in good faith and represents your best effort
If your Chapter 13 bankruptcy did not result in you meeting these requirements, then you must wait six years from the date of your Chapter 13 filing to file for Chapter 7 bankruptcy.
If you filed for Chapter 13 in the past, you are also eligible to receive a discharge in a Chapter 13 case as long as the first case was filed more than two years before the new one.
Before you meet with an attorney, try to gather some information on your previous bankruptcy. Create a file of paperwork of earlier bankruptcies that includes information on dates and debts discharged.
If you find you can’t file for bankruptcy again for several years, don’t despair, there might be other options to consider that could leave you better off. Depending on your reason for considering bankruptcy in the first place, those alternatives may include: dealing with creditors directly, negotiating payment agreements, settling debts, and or engaging in administrative remedies such as income-driven repayment on federal student loans and offer in compromise for tax debts.
If you have filed bankruptcy before and feel you may need to file again, you should consult with a bankruptcy attorney who can walk you through your options and help you determine your best course of action, whether it is bankruptcy or other non-bankruptcy solutions to avoid being forced into a decision that may not be the best one for you.